Doesn't Anybody Like Oil Service Stocks?
Hi Philip. I never thanked you long, long, time ago for your input regarding Kemet, and the capacitor manufacturers. It kept me out of trouble there.
The outlook for oil, and oil services and oil drilling companies is very, very bullish for the next 3 to 5 years out due to rising world demand. Also for all of 1995, and 1996, THESE companies produced some of the greatest returns of the entire universe of stocks. And as a sector, they are still underweighted institutionally speaking, which can only mean further significant gains ahead as excellent fundamental conditions, big profits and being underowned institition wise means further demand for stock in this sector.
Regarding investing in oil, I am a Johnny come lately. I got tired of the volatility earlier this year in the tech sector, and started casting about for something a little more stable with returns that would be commensurate with technology stocks, and oil services is where I landed. Oil companies are making money from both ends - technology is allowing them to find oil at a lower cost (about $7 to $8 a barrel) and world demand is driving the cost of a barrel up. And so they are drilling like crazy, especially in the Gulf of Mexico, which means big demand for drilling rigs and assorted equipment providers. To me, the kicker to boot, is that oil is countercyclical to the market as a whole and so can act as sort of a hedge if the market begins to go south next year.
Check out the big gains in Cooper Cameron, Diamond Offshore, Rowan, TransOcean, Halliburton, Seitel, Seacor, Flores and Rucks, Chesapeake Energy, Tuboscope, Newfield Exploration, etc. You could have thrown a dart and made money here. My safest long-term recommendation - meaning smallest risk for above average gain would be Schlumberger. Good luck to all.
PS - I am still invested in technology and biotechnology, and am following my own advice with investments in a diversified oil portfolio of stocks. |
